This is the Asia trade. I'm Chevrian in
Tokyo
and I'm Averil Hong in Singapore. The
top stories this hour, a weak Wall
Street leadin for Asia as Nvidia leads a
big tech selloff. The RBNZ expected to
resume rate cuts today, taking the cash
rate to a three-year low. Intel shares
extend gains as the Trump administration
weighs taking a stake and suspect buys
in, giving the troubled US chipmaker
access to billions in fresh capital. And
European leaders said to offer troops as
a Ukraine security package takes shape
ahead of a potential Putin Zalinski
meeting.
>> Take a look at how we're setting up for
the Asia markets. We are seeing Chicago
Nikk futures holding steady at the
moment, but this of course after
Japanese stocks already saw pressure in
the previous session coming down from
record highs. We'll be watching those
JGB today because we had that 20-year
bond auction seeing weaker than average
demand. We were watching the Japanese
yen still holding at that 147 level
against the US dollar. Pretty tight
range of trading. Of course, lots of big
decisions this week, including today. We
have the RBNZ expected to cut rates. We
have the Bank Indonesia uh central bank
also expected to hold pat given that
they might probably want to support the
rupia. We have China's commercial banks
also coming out with loan prime rates
today. So do watch out for the offshore
yuan at that 718 level. But it's really
about central banks this week, right?
Take a look at how US futures are
setting up ahead of Jackson Hole. We do
have Chair Powell of course speaking
this week and really those expectations
being cemented around that 25 basis
point rate cut from the Federal Reserve.
Right now not doing much in the future
side of things, but take a look at those
tech names that we've been watching
because it's really been about that
broad selloff. Of course, we continue to
see valuations pretty stretched. We are
talking about the NASA 100 trading at 27
times expected profit in the next 12
months and the likes of Nvidia for
example seeing its biggest plunge since
April. Let's discuss all of this and
bring in Garfield Venos who leads our
markets live Asia coverage. Garf, are we
going to see a sustained rotation out of
tech now?
>> Well, it's very hard to say because the
move overnight didn't have any obvious
triggers. I mean in fact it looks to
some extent like a bit of nerves before
a couple of key events. You one is the
Jackson Hole uh speech and the potential
that that will
see chairman pal push back against the
idea of rapid rate cuts uh and which
could also of course set off some
turmoil with the White House. And then
next week we've got Nvidia earnings and
that's absolutely key for the tech
space. There's been some growing
concerns that the AI boom could start to
run out of momentum. Not that it would
go away, but that a lot of the
lowhanging fruit, so to speak, in the AI
space have already been picked. So,
this, you know, looks a lot like there
are some investors who've decided might
be a good time to reduce their exposure
heading into those events. uh you know
given the risks
>> GV does this include for Asia tech or do
you think they can sort of do their own
thing?
>> Oh no Asia tech is very much exposed uh
you know because I mean the big players
in in Asia tech most of those are very
tightly keyed into either Nvidia itself
or alternatively to some of the other
main you big names like Apple for
example. So, it's hard to see Asia Tech
doing particularly well after Nvidia's
decline. One potential bright spot could
be China because they have their own
local drivers. You know, we've we
haven't heard much about deepseek
lately, but China is pushing to develop
uh its own
somewhat independent from the US scene
uh you know, champions in this space.
So, China might show a bit of
resilience. The rest of Asian tech looks
unlikely to 3.5% declines for Nvidia and
the declines therefore at AMD and then
of course the Taiwan semiconductor ADRs.
All of those signal a pretty dim outlook
for Asian shares in general today and
especially Asian tech.
And on Jackson Hole week, of course, the
focus very much on what's happening in
the bond space as well. We have seen the
two-year yields really come down
significantly this month on expectations
of that 25 basis point rate cut from the
Fed in September. But now there are even
bets that it could be bigger than that
50 basis point cut.
>> Well, 50 basis points seems very
unlikely unless we get uh a really bad
jobs report. uh you know at the
beginning of next month. We had a
shockingly poor one uh last time round
with those uh infamous revisions
and that's what sent two-year yields
down and that's why you've got a very
strong conitu constituency in the market
expecting that 25 basis point cut. 50
basis point cut seems very unlikely
possibly even with some poor jobs data
because uh Fed does have a dual mandate
and the inflation part of that mandate
looks very tricky as well. Uh the PPI in
particular showing that
inflation pressures have come back uh
and that they're not just about tariffs
you know the services side of things is
at least as concerning as the signs that
there is some trickle through from
tariffs to inflation. So in that
situation, in a lot of ways, the Fed
would be wait and would be in wait and
see mode perhaps right up to the
meeting. Uh and we have the complicating
factor now that President Trump's calls
for major rate cuts are, you're going to
have an impact. Uh you Trump's calls for
rate cuts have already arguably had an
impact. When you look at the way that
two of the Fed governors desented last
time round, called for a rate cut, uh,
and those two
seem to be far more in line with the way
President Trump is looking at things,
even if they're trying to justify it on
the basis of uh a weak economy.
President Trump's
argument is that the economy is doing
great, but it would do better uh if
there were rate cuts and in particular
then the government wouldn't have to
spend so much money on paying interest
on its debt.
>> Yeah, Goff, to your point, Trump posting
on social media again about so-called
too late Powell that he's hurting the
housing industry. Gaff, thank you so
much for running us through all this.
Garfield Reynolds who leads our markets
live Asia coverage. Now we are watching
for how these recalibration of Fed rate
cuts could affect tech and one of the
tech names that interestingly buck the
selloff on Wall Street was Intel. Shares
of the struggling chip maker are up
nearly 30% this month so far. Let's get
more with our Asia tech correspondent
Annabelle drawers in Hong Kong. Belle,
it looks like these Intel bulls, they're
finally being rewarded for their
patience.
>> Yeah, that's right. As you said, we've
seen a really big surge just in the
stock alone over the past few weeks. And
the catalyst for that, I mean, we were
kind of talking about them yesterday,
but just to recap, you've got those
reports of the US government is looking
at taking a 10% equity stake in the
business. And then as well, adding to
that, you had Soft Bank announcing that
$2 billion investment into the company
as well. So these again these these
positive moves you saw that rally
overnight but here you can see uh just
in August alone you're looking at gains
of around 30%.
The surge though means that we're
trading at 53 times profits projected
over the next 12 months and that is the
highest going back to 2002. Uh which
means that we're in docom territory as
well. That is actually a cause for
concern because of course a lot of
people will talk to you about the the
issues that Intel as a company faces.
It's really just at the outset here of
what could be a multi-year restructuring
effort. The outlook as well looks very
challenged and you also saw that because
we had earnings at the end of July and
that was another disappointing release
for the company. What's interesting as
well is when you speak with analysts, I
mean only eight of them would have a buy
rating on the stock right now. 80% of
them have the equivalent of a neutral
rating. So yes, it has had a big surge,
but there are some causes for concern
off the back of that as well.
Yeah. And really concerns about the
broader tech sector supercharged by that
frenzy over artificial intelligence.
Right. Meta seems to be restructuring
their AI division. What do we know?
>> Yeah, this is an interesting one as
well. Actually, it was first reported by
the information. We've had more details
on that overnight. So, we know of course
Meta is a company that's been spending
billions of dollars on its efforts to
build out so-called artificial super
intelligence. Uh this is under the the
leadership of someone who's just
recently joined the business formerly.
That's Alexander Wong. He is the chief
AI officer for the company and he
actually just sent out a memo overnight
talking about how the company is going
to be changing its AI business
structure. They're going to be splitting
into four new teams or four distinct
teams that are going to be uh basically
looking at a few different tasks. The
first one is going to be overseeing
Meta's large language models. The second
one is going to be an internal AI
research lab that's actually existed
within the company for more than a
decade, but it will be focused on
longerterm projects. The third one will
be taking those projects and putting
them into consumer products.
And then the fourth one as well is going
to be focused on the infrastructure, the
expensive infrastructure that's needed
to support Meta's AI ambition. So no
layoffs actually were part of this
reorganization. That's according to
people that are familiar with the
matter. But but still, as we said, it's
it's an interesting move given how much
Meta has been spending to try and
acquire the best talent in the market.
>> Bel, we'll also be getting an update of
sorts from BU's AI efforts when it
reports. What are we expecting?
>> Yeah, well, BU, as we know, is a company
that has quite a different outlook when
it comes to AI. They were an early
leader in the AI landscape in China in
particular. They have their Ernie bot,
of course. It was one of the first uh
chat bots essentially on the market, but
since then it's really had to seed a lot
of ground and you've seen that really
reflected as well in in quite a
challenged sort of share price outlook.
But our Bloomberg intelligence team is
saying that essentially the the the the
prospects still look quite tenuous. Uh
they're expecting another set of weaker
results for the business. That's going
to be further undermining the the growth
prospects. But they're also seeing sort
of lack of traction both on the top and
the bottom line. And so they're saying
that the the essentially the AI
prospects do remain overhyped. What will
be interesting as well of course is to
get an update on the robo taxis given
that Apollo go which is its own robo
taxi arm is continuing to to sort of
ramp up its international expansion. So
just two of the key things we're
watching out for. Ad revenue as well
will be another focus for us given that
there's those concerns as you build out
your AI assets. Are you also
cannibalizing the the initial search
engine business, the the sort of bread
and butter business for the company as
well?
>> Bel, thank you so much. Our tech
reporter, Annabelle Jolles. Coming up on
the Asia trade as well, Bernstein tells
us why they remain bullish on Asian
equities through the rest of 2025.
Plus, analysis on the Ukraine peace
process with the US German Marshall
Fund. Much more ahead. This is
Bloomberg.
A package of security guarantees for
Ukraine will take shape as soon as this
week with European leaders offering
troops as part of a potential peace
deal. Ukrainian allies are hoping to
strengthen Kiev's position ahead of a
potential meeting between Presidents
Vladimir Putin and Vladimir Zalinski.
Let's bring in Bloomberg senior editor
Derek Wallback. Derek, so do we have any
idea right now what this package could
look like?
>> Well, Sherry, uh it's something that's
very much still taking place. So, let's
start there. Uh this is not a situation
where we've got a lot of final details.
This is something where European allies
are racing to try and find a package
that can work for all of them that can
bring in the United States as a key
partner. And they're trying to do it in
a way where it's uh an initiative of
their own. Let's say it that way. The
the view among European allies of
Ukraine is that Vladimir Putin does not
necessarily get a veto over the idea of
a security force that might get left in
Ukraine to sort of bolster Ukraine in
any kind of final deal. And so they're
using the fact that Donald Trump spoke
highly of this idea at the White House
in public on the record to say, "Right,
let's go. Let's put this together. Let's
figure out the logistical details of
what this might look like and get it
going right now. The idea being perhaps
if this goes through that this is a
credible defensible position that can
help Ukraine stay solvent as a
geographic force in any peace deal
should there be complications arising.
But at the same point, if Vladimir Putin
is not serious about peace, there is
some argument that maybe this would be a
trip hazard that would expose that. Uh
and that is something that we've heard
suggested as well. The key crux of this
is some form of uh actual physical
tangible support. what that looks like,
whose boots are on the ground. There was
a suggestion that uh that American boots
on the ground would not be in in the in
place here, but it would be European
ones. So, that's an important thing. And
then the other important thing is this
idea of an article 5 style uh trigger
mechanism in terms of if Ukraine is
attacked again, what does that trigger
and how does that process go forward?
It's modeled on the idea of NATO's
article 5 which says if one is attacked
all are attacked and so that's a really
important kind of thing to figure out
logistically but the move is on to try
and do this quickly
>> right so those are the contours of a
potential Ukraine security arrangement
but we also hearing from Trump how he
wants Silinski and Putin to meet how
much appetite is there from the various
parties to actually do So,
>> well, April, I think that's a really
good question. Right now, Donald Trump
is saying that Zalinsky wants to meet
and that Putin wants to meet, right?
Zilinsky at the White House was saying
he would be happy to do so. He would h
be happy for Donald Trump to be there in
a following trilateral meeting. So the
the the words are being said, how this
necessarily comes together, what
preconditions there are, where this may
take place, there are a lot of trip
hazards in the way. I think where this
takes place is a really interesting one
uh that we're looking at right now. Uh
you know, Vladimir Putin mentioned when
he and Trump were meeting in Alaska that
maybe the next time they could go to
Moscow. For many obvious reasons,
Ukraine probably does not want to send
Vladimir Zalinski to Moscow. Another
option that was mooded was the idea of
Budapest. Now, Budapest, not Hungary, is
one of the key uh nations that has been
kind of blocking Ukraine's idea of
getting into the European Union. And
there are a bunch of historical reasons
why Ukraine might not be thrilled with
the idea of Budapest. So trying to
figure out where is an acceptable
meeting location is like number one on
the agenda and then everything else is
harder from there.
>> It almost sounds like there are no good
options here. Derek, thank you so much.
Bloomberg senior editor Derek Walbang.
Some other stories we're following. US
Commerce Secretary Howard Lutnik says
written documentation on the trade deals
agreed to with Japan and South Korea are
weeks away. He also told CNBC that
Washington is on the same page as Tokyo
and Seoul on the deals. Trump earlier
announced that the US would charge a 15%
tariff on imports from both countries.
The Trump administration says it'll step
up scrutiny of imports of steel, copper,
lithium, and other materials from China.
It's seeking to enforce a US ban on
goods allegedly made with forced labor
in the Sinzang region. Under a 2021 law,
the US assumes anything made even
partially insang is produced with forced
labor. But companies may win exemptions
if they can present evidence that proves
otherwise.
President Trump has expanded the scope
of his steel and aluminium tariffs to
include more than 400 types of consumer
items containing the metals. The updated
list covers auto parts, chemicals, and
furniture components affecting products
such as table wear and motorcycles. The
change took effect on Monday and did not
exempt goods already in transit,
catching the logistics industry
offguard. Sherry
and April, President Trump's terrorist
seems to be creating some strange bad
fellows. Indian Prime Minister Narendra
Modi hailing closer ties with China as
foreign minister Wangi wrapped up a
two-day visit amid Trump's tariff
threats. The two sides confirming that
Modi will meet with President Xiinping
later this month in China. Chief North
Asia correspondent Stephven Engel joins
us now in Hong Kong and Steve it seems
that New Delhi is recalibrating its
foreign policy. How significant is this?
Yeah, it's pretty significant but not to
be unexpected because again the last
time the Shanghai Cooperative
Organization or SEO which is going to be
meeting by the way uh the week after
next or the weekend after next uh is in
China and that's where Modi's going to
go and meet Xiinping. The last time it
met in Russia in I believe it was
October of last year. That's when she
and Modi previously met just before uh
the election of Donald Trump. you could
sort of see uh the if you want to call
it the storm clouds of protectionism
rising and so for India and China the
world's two most populous nations and
you know sizable economies in their own
right as well as participants of the
BRICS grouping as well as the SEO uh
they are try trying to sort of bridge
their differences join forces and
counter those threats of tariffs because
the Trump administ ministration is
threatening very soon upwards of 50%
tariffs on India. 25% reciprocal tariff
plus an additional secondary tariff of
25% for India continuing to buy Russian
oil in defiance of global sanctions. So
they are making good on their pledges to
improve their relations from that Kazan
meeting in October of last year. So
that's going to lead potentially to this
summit on the sidelines of the SEO in
Tenzin for the SEO on August 31st and
September first. But again the wild card
is China also has a very strong ties to
India's uh longtime
enemy if you want to call it that
Pakistan. Wangi by the way leaves New
Delhi today goes to Pakistan for a
couple of days as well. So yes, there's
a there's a massive global chess match
going on right now.
>> And Steve, you give us a good reminder
of how India could still see 50%
tariffs. We're hearing from the US
Treasury Secretary Scott Besson. He's
reiterating Trump's justification to
impose tariffs of these levels on India.
What's his latest take on this?
>> Yeah, that's right. So he's essentially
saying that India before Russia's uh
2022 invasion of Ukraine uh bought about
1% of its oil needs from Russia. Now
he's claiming it's 42%. What he's saying
because of the price caps and the like
uh on Russian oil Russian or excuse me
Indian conglomerates for example Mukesh
Amani's Reliance Industries which has
the world's biggest refinery in western
India and they have been buying Russian
oil. He's saying these Russian Indian
conglomerates have been buying cheap
Russian oil and reselling it and
therefore profiteering. So if they have
now 42% compared to 1% there's an
obvious reason why they are doing that.
He's saying Bessant is saying in an
interview I believe with CNBC
essentially that these you know
conglomerates in India are profitering
up to the tune of $16 billion. So uh
that is one of the justifications for
adding this additional secondary tariff
according to the United States. Uh this
is something to watch going forward.
India has repeatedly said uh you know th
those additional tariffs are unfounder
or unjustified essentially that India
can go to the global market uh and find
the cheapest source of crude.
>> Right. Steven Engel our chief North Asia
correspondent there. We have more ahead
on the Asia trade. This is Bloombark.
trading at the moment. Of course, we had
a tech sell off in the overnight
session. We were still a little bit
under pressure this after we saw really
the NASDAQ 100 losing ground. It's
already at stretch valuations trading at
27 times expected profits. In fact,
options traders fearing a deeper tech
plunge and now buying disaster puts.
We're also following some idiosyncratic
stories. So do watch out for Intel
jumping after Secretary Lutnik confirmed
that talks are on the way for the US to
take a stake. And of course we have
heard about that cash infusion from
South Bank as well. The Bloomberg US
dollar really not doing much. Uh we had
seen a little bit of gains in the
overnight session, but really thin
volumes overall. Treasuries also gained
ground in the overnight session, but a
lot of uh tight trading at the moment
ahead of Jackson Hole, of course, and
that Fed chair speech on Friday. We have
more ahead on the Asia trade. This is
the president um has spoken
this and both leaders have expressed a
willingness to sit down with each other.
Um and so our national security team
will help both countries do that.
Ultimately, the president has always
said that there are areas of
disagreement in this war that will have
to be discussed and decided upon by
these two countries. And so, he wants
these two countries to engage in direct
diplomacy.
White House press secretary Caroline
Levit on President Trump's push for a
meeting between Vladimir Putin and
Ukraine's leader Vladimir Zalinski.
Let's get more on these diplomatic
dealings behind the Russia Ukraine
conflict. Joining us now is Christine
Berina, senior fellow for US defense and
transatlantic security at German
Marshall Fund for the US. Christine,
really good to have you with us. Uh,
first off, let's start with what we're
seeing from the meeting in Washington.
European leaders seem to be rushing to
capitalize on Trump support while they
can. What is your sense of how much they
can count on it? How consistent is US
support going to be?
We've seen a lot of really interesting
developments on US security guarantees
and support for Ukraine in the last
couple of weeks. Since the beginning of
this term and this war, Trump has said
it is not his war. And so, he's tried to
create distance between himself and
Ukraine's fight. And yet, in the last
week and in the last days, we're seeing
Trump express greater interest in
helping provide security guarantees to
Ukraine once the war is over. The
Europeans have been putting together
something called the coalition of the
willing which is a group of European
countries and not only European uh that
are interested in providing support uh
once the war is over to maintain peace
once it gets there and there is the talk
of boots on the ground in particular the
Brits and the French are the most likely
to be providing this although even the
Estonian uh prime minister today said
that there was interest from Estonia in
contributing now this is an effort that
hasn't had a US military component and
it hasn't gotten very far because the US
hasn't said that it wanted in and yet
now we have a situation in which Trump
is saying the US can coordinate the US
can be part we're not talking about
group boots on the ground at the moment
but we are looking at the potential to
support from the air could mean uh
airplanes could mean intel satellite
space we don't know exactly yet but the
US role here in particular if it was
actual planes in the air would be a
gamecher that would allow European
companies, European countries to feel
much more comfortable in sending their
troops once a peace deal has been
reached. This is notable, but I don't
think there's a reason to think it's not
serious on behalf of Trump. He has had
very tough words for Ukraine, for Europe
over the past few years, in the past few
months. And yet we've seen Trump commit
significantly to Article 5, to the
Europeans. He's been happy with the
trade deal he has with the EU. He's
happy with NATO defense spending. And
now he's stepping up militarily
potentially here, too. And that's
excellent,
>> which seems to suggest that this US
support could last. Uh we also hear how
he's advocating Trump for a Putin
Zalinski meeting. What is your sense of
how likely this is going to be?
>> This is going to be a very significant
challenge. Trump knows and the Europeans
know that we're not going to get
anywhere unless we have an agreement
between Putin and Zalinski. Putin hasn't
wanted to be in one room with Zilinski.
He is happy to have a bilateral meeting
with Trump in Alaska. He feels very much
himself to be a great world leader and
yet he doesn't seem to think that
Ukraine should even exist as a country.
So sitting down with what he thinks is
the illegitimate president of Ukraine of
a country that he doesn't find
legitimate at all is in some ways from
Putin's perspective beneath him. And so
you need to come to a meeting between
these two men when one man doesn't think
that the other man is worthy of his
time. And that's going to be incredibly
difficult. Putin's going to have to come
to terms with the fact that he has not
been militarily able to take all of
Ukraine and Zinski is going to have to
sit at a table with the aggressor
>> and President Trump urging that
flexibility coming from both leaders.
Right. So what are some of the
conditions that perhaps both leaders
could live with at this point?
>> I think a key question here is what
happens to the territory that has been
occupied. Russia started 11 years ago
with its aggression towards Ukraine with
capturing Crimea and areas of the
Dawnbus and it has only accelerated
since then. Does that territory stay in
Russian hands? It's very likely that de
facto what is in Russian hands will stay
in Russian hands because Ukraine has not
been able to get it back. And then
there's the question of what happens to
that territory that Russia wants. So it
has said that or claimed to have annexed
legally these four regions of Ukraine.
It does not hold the full regions of any
of the four militarily at the moment.
Putin would like through diplomatic
channels to get what he couldn't get
militarily. So these are the really
tough spots at this question of
territory and also the question of you
know is it de facto or is it legally
recognized as Russian
>> and and once you get an agreement that
really sets precedent right are there
any red lines for the Europeans?
All of this is terrible uh in terms of
precedent. The only good scenario in
terms of European security, but more
broadly for the international order that
we have been living in is that it is
utterly unacceptable and will not work
to change borders by force. It's
important as a deterrent for any big
country not to change the borders or
invade its smaller neighbors. So, if any
of this territory stays in Russian
hands, and it's incredibly likely that
it will, this is a lesson for other
major powers in the world that covet
their neighbors land that if they start
a war, it might be really hard, but at
the end of the day, the map might be
different. The Europeans don't love
that. And there is a sense that the
costs on Putin must be high so that he
doesn't try this again. And there's a
question about when will Russia have
enough, does it ever have enough? And
what will other major powers around the
world that might be inclined to be
aggressive do to their democratic
neighbors?
>> Right. The Europeans would be wary of
rewarding aggression. Christine, thank
you for your analysis. Good to chat with
you. Christine Brazina is senior fellow
for US defense and transatlantic
security at German Marshall Fund for the
US. Coming up, New Zealand Central Bank
expected to cut interest rates by 25
basis points today and resume its easing
cycle. A preview of that decision next.
This is Bloomberg.
Let's take a look at G10 bonds as the
countdown continues towards Jackson
Hole. Treasuries manage to snap a three
session losing streak. They could still
come under some pressure though and we
are also seeing that pressure sort of
affecting UK bonds yields hitting their
highests in nearly 3 months and this is
against the backdrop of inflation data
that could come and cement the case
against further easing from the Bank of
England. We are also keeping watch on
JGB's in the session after a poor
showing for the 20-year auction just a
day ago. And that really highlights the
lingering political uncertainty and what
that means for the fiscal trajectory of
Japan. Of course, keeping tabs on bonds
in New Zealand as well as the RBNZ is
seen cutting interest rates later today,
restarting its easing cycle after a
pause in July. The move comes amid
growing signs of an economic slowdown.
For more, let's bring in Bloomberg
Economics Australia and New Zealand
economist James McIntyre. So James, more
or less consensus 25 basis points today.
A cut from the RBNZ, but what next?
>> Yeah, thanks. So uh that's right, a cut
again from the RBNZ today after that
pause in July. It does look that we have
seen the RBNZ after delivering 225 basis
points of rate cuts so far that we're
moving into a different phase of their
easing cycle, a much more uh drawn out
and and slower phase. So our view is
that they've still got a few more to go,
but that those will be quarterly rather
and that we're likely to see those
pauses that we saw in July between each
of the key quarterly meetings coming
through. But you know it's it's going to
be quite interesting what the RBNZ tells
us today. They're going they have
previously in uh the May uh decision
outlined uh a for or an expectation that
they could take their cash rate to
slightly below neutral but we have seen
the economy continuing to struggle. It's
likely that we might see them uh
reaffirm that rates have further to go
and maybe a little bit further into
neutral territory could be something
that we're on the lookout for in their
forecasts.
>> Tell us a little bit more about that
economic data because when it comes to
inflation, it seems to be broadly in
line with the RBNZ is thinking about,
but is it all to do with the tariff
threats and just global demand?
>> Yeah. So what we've seen um when it
comes to the inflation or the the data
that's come through since we had not
only the July meeting but uh but since
May so but especially over the last
couple of weeks the inflation indicators
so there's some monthly data that that
comes out and that's shown a few little
hot points in the inflation basket. uh
things like uh food prices ticking up,
but we know that that uh when we break
that down that that's a story that's
also benefiting New Zealand's economy
from an income and a trade side. So
there's whilst there's uh the US has
announced that New Zealand's tariffs
will go from 10% to 15%. Uh on the other
hand, the uh surge in dairy prices and
in meat prices is giving an overwhelming
export boost that's going to more than
compensate for that. But unfortunately
that comes with a bit of a kicker in the
tail that those global um produce
prices, dairy prices are are feeding
through into some inflation pressures.
That's not something the RBNZ's really
going to be able to do anything to push
back against or control. And on the at
the same time when we do look at things
and we look at the domestic economy
confidence not so hot especially for
consumers and the labor market looks
like instead of having a turnaround
which the RBNZ uh which was how the RBNZ
saw things in May that it's continued to
get worse and worse and worse and so
there's a little bit of work there that
even with maybe some bubbling inflation
pressures global inflation pressures
still lingering a bit that labor market
is going to be something that data there
is is enough we think to drag them over
the line not just today but over the
course of the coming months again.
>> Yeah, James, I was just about to ask you
if we could just pick up on that point
on what you're seeing in the labor
market. Uh the RBNZ could focus on it.
What do you think we're going to hear
perhaps post decision as well?
M so when it comes to the last big
discussion on the labor market, the May
forecast, the RBNZ had said that they
they thought that the labor market was
leveling out and about to begin uh an
upswing, a cyclical recovery.
Unfortunately, that's just not how it's
turned out. Uh we do get weekly data uh
on the number of people receiving
payrolls in New Zealand uh which the tax
department uh provides through to the
stats bureau that's showing that there's
less people employed today than 2 years
ago in New Zealand. and the monthly data
that the RBNZ was relying on that's been
revised away. So that stabilization and
and early nent signs of an upswing is
showing that actually things are going
in the other direction on the labor
market. Uh so that's that's something
that the RBNZ's going to have to come to
terms with and acknowledge that and when
we think when when they do I think it
means they're going to be calling for
that cash rate uh to be going a little
bit further below neutral next year.
Bloomberg's James McIntyre there with
what to expect from the RBNZ. Of course,
we got that decision today. Same with
central banks. Federal Reserve Governor
Michelle Bowman says she's staying
focused on her regulatory portfolio even
as speculation grows over the succession
plan for Fed chair. Uh Bloomberg spoke
exclusively with the vice chair for
supervision ahead of this week's
meetings at Jackson Hole.
Well, right now I'm committed to doing
the job that I have, and we've really
hit the ground running with our with our
request for um information on check
fraud and other payments fraud with the
uh the SLR proposal that we just put
out, the LFI rating system. We're taking
a really hard look at our supervisory uh
components and and across our reserve
banks as well as at the board to ensure
that we're focused on material financial
risk. So, I have a big agenda. We're
moving through it quickly. Um, obviously
we need to get the the capital proposals
completed uh in the near future. Um, but
you know, I'm I'm really focused on the
job that I'm doing and I'm grateful to
the president for appointing me and and
the Senate for confirming me to this
role. So, that's what I'm focused on
right now.
>> Well, some Republicans on Capitol Hill
have suggested that we should change
this three-headed uh regulatory system
and maybe uh take regulation away from
the Fed. uh what are you telling them
and what do you think the odds of
something like that happening are?
>> Well, I think the most important part is
to remember that we have uh we have a a
banking system that's a dual banking
system. So, we have national banks and
we have state chartered banks and the
FDIC and the Federal Reserve oversee
those state chartered banks together
with the state banking commissions. So I
think it's important that we maintain
the the ability to oversee both the
state chartered banks and the and the OC
OC with the national banks and that we
have a rational framework that is very
similar for all of those banks going
forward. So there's not arbitrage
between the three regulators but
Congress is obviously responsible for
making any changes to that system. So,
you know, we'll be working closely with
them to ensure that they understand what
we're focused on and what we're doing
that's supportive of of the efforts of
all of the agencies together.
>> So, you come out to Jackson, but you
also go up to Capitol Hill a lot.
>> I spent some time on on Capitol Hill.
Absolutely.
>> Fed vice chair of supervision, Michelle
Bowman, speaking exclusively with our
colleague, Michael Murphy. Now, it's
also time for morning calls ahead of the
Asia trading day, and Citadel Securities
Scott Rubnner says retail investors may
slow their pace of stock buying in
September before picking up again later
this year. In a note to clients, Rubnner
called the surge in equity purchases
structural, not cyclical. He says it's
driven by consumer health and market
engagement rather than a passing trend.
An April Bank of America is advising
clients to sell 20-year Japanese
government bonds, citing rising
political risks. Strategists Oliver
Levston and Tomu Yamashita say
expansionary fiscal policy is now
inevitable after Japan's ruling
coalition lost its majority in both
houses. As a hedge, the bank recommends
Australian dollar bonds, specifically a
basket of the longest dated Australian
semi-government securities. In fact, we
just had a weaker than average 20-year
debt sale here in Japan. So, we'll be
watching JG Beans at the open. This is
We have breaking news out of Japan. We
are getting the latest trade numbers and
we're seeing the July export numbers, a
contraction of 2.6%
and it's a really bigger contraction
than what was estimated from the
previous year. This could be the biggest
fall in about four years or so. Of
course, we continue to see the tariff
pains deepening here in Japan. in fact
leading to a trade deficit of 117.5
billion yen. The estimate was still for
a surplus, but we do have imports also
falling 7 and a half% a smaller
contraction that was expected for the
month of July. But this number also
turning into a contraction from
expansion in the previous month. We also
have core machine orders coming out a
contraction or actually a gain of 3% for
the month of June. The expectation was
for a contraction. So perhaps uh the
spending uh capex coming from these
businesses not as bad as it was expected
especially after a contraction last
month as well. So for June we're seeing
machine orders year on year growing 7.6%
but the tariff pain seems to be in place
as again the export numbers for the
month of July coming in at a contraction
of 2.6%
bigger than expected. Given this
backdrop, we're seeing conservative
guidance by Japanese companies uh
leaving an opening for upward revisions
perhaps in the next earning season which
may further boost the market's
record-breaking rally. For more stocks
reporter Momoka Yokoyama joins us now.
So Momoka, I mean it's not necessarily
surprising that Japanese companies give
a conservative guidance, but what is
prompting this more cautious stance now?
That's definitely um true that Japanese
company have been traditionally sort of
posting conservative sort of cautious
outlook for earnings. Um but this year
um just about 61 topics included
companies have revised up their profit
guidance um for the fiscal year March
and that's about um half of the ratio in
the same period last year and also the
lowest um percentage since 2020 when
obviously the uncertaintity was quite
the level of uncertaintity was quite
high with corona virus going on um but
obviously um the taliffs um although um
Japan sort of have settled at 15% which
is down from the originally planned um
percentage um until um it reached a deal
there was so much confusion about um how
much of a pluggus has been made and even
after it reached a deal um the details
to which was discussed or confirmed has
sort of remained unknown and uncertain
for some period of time.
So um I guess that has made companies to
um make it increasingly difficult and
challenging to forecast what the profit
or sales will look like towards the year
end. Yeah.
>> Moa Averil in Singapore here. What is
all this going to mean for Japan's nay
after it's rallied to its record high?
the um cautious and conservative outlook
might point for um positive supplies.
The possible positive supplies going
forward. Um that's especially um given
the yen is trading sort of weaker than
um a lot of company forecasted. Um
amongst topics 500 um companies um it
the assumption is that was a lot ofund
144 per yan um sorry 144 yen uh per
dollar uh and then now the yen is
trading around um47. So that might uh
give a buffer for the companies to sort
of pause surprisingly u better outlook
um for the companies and obviously with
tariffs we have a lot more clearity um
now with the 15% um so the companies
might reise up or post better than
expected quality earnings soon
>> right Momoka thank you so much
Bloomberg's Momoka Yokoyama for us
checking some of the stocks to watch
when trade opens in Australia Korea and
Japan and shortly as well. Asian tech
will certainly be in focus after Nvidia
led the NASDAQ 100 to its second worst
drop since April's tariff shock
potentially pressuring the likes of
Skhinx and Tokyo Electron. Meanwhile,
SoftBank's 47 billion AIE rallies at
risk of stalling with the 14-day RSI now
signaling that the stock might be
overbought. Sherry.
>> Yeah. So definitely the tech sector
really something to watch at the open.
But of course take a look at how we're
setting up because Nikki futures are now
pointing to the downside of 6/10 of 1%.
This after already stocks fell from
those record highs. The Japanese yen has
been trading in a narrow range. All of
this ahead of Jackson Hole obviously.
But we also had Japan's July export
numbers surprising to the downside. A
contraction of 2.6%. Perhaps the
steepest drop I believe in more than
four years or so. Also, we'll keep you
updated on what stocks to watch,
especially when it comes to those
exporters uh and export focused stocks
here in the country. Sydney futures
though pointing to the upside of two ten
of 1%. The market opens in Sydney, Soul
and Tokyo are next. This is Boom Bark.
This is the Asia trade. We're counting
down to Asia's major market opens and
we're focusing April on monetary policy
because here in Asia, of course, we have
the RBNZ expected to cut rates today.
Bank Indonesia as well expected to stand
pat and central banks of course in focus
ahead of Jackson Hole as well.
>> Absolutely. And we had Fed speak right
from Michelle Bowman. We're going to be
hearing as well from Christopher Waller.
We also watching out for some of these
data points out of the US before we get
to Jackson Hole. uh including jobless
claims and some of these manufacturing
PMIs and all this against the backdrop
of Trump really widening that drag net
on tariffs. It looks like he's targeting
Chinese steel lithium as well and we're
seeing potentially impacts on Asian
economies as well from the tariff war.
>> Yeah, we'll be watching China's monetary
policy as well because we are getting
those loan prime rates from commercial
banks today. But take a look at the open
in Japan because we had seen already
downside pressure for Japanese stocks
falling from those record highs and we
can see the Nikay now down 3/10en of 1%.
We have those export numbers coming from
July a contraction of 2.6% which was
bigger than what markets had expected.
The topics is also down a tenth of 1% as
we're still staying really rangebound on
the Japanese yen against the US dollar.
This of course ahead of Fed Chair Powell
speech later this week as well. We've
been watching JGBs because the 20-year
auction that we had just yesterday saw
weaker than average demand. The 10-year
yield at that 158 level. And take a look
at how South Korea is also coming online
because of course we mentioned those
trade negotiations ongoing, the threat
of more tariffs. But uh really we're
hearing from Secretary Lutnik also
saying that written documents when it
comes to any trade deal with South Korea
with Japan is still weeks away. the cost
speed down 1% we had already uh seen the
lowest levels in more than two weeks or
so and we're seeing that uh tech heavy
cost also losing 1.4% 4% of the Korean
one is still rangebound. April,
>> yeah, let's take a look at what we're
seeing in the rest of the Asia-Pacific.
As you said, the central bank is in
focus uh today. We got the RBNZ, the
Kiwi uh has been coming under slight
pressure, but we have some of our
strategists also saying that it could be
buyers higher if the US rate trajectory
is in focus. So, as we watch out for
Jackson Hole, keeping tabs on what we're
seeing Aussie against the greenback is
looking pretty flat. The Australian
stock benchmark is extending declines
from a day ago. Remember, it was really
that earnings digestion, including from
some of these biotech names, CSL, that
slumped by the most. I think it was on
record. That was the drag on the
Australian ASX 200. So, a bit of that
extension into today's session. seeing
pressure creeping back into US
treasuries as well at the stock uh start
of trade. Now of course what we saw
overnight was also that selling in tech
stocks Sherry and one stock that buck
the selloff on Wall Street interestingly
was Intel shares of the chip maker up
nearly 30% this month so far. So let's
get to our Asia tech correspondent
Annabelle Drollers in Hong Kong. So
Belle, it looks like these Intel bulls,
they're being rewarded for their
patience finally.
>> Yeah, that's right. At long last perhaps
for for some of those in the market, but
I mean the catalyst we've kind of been
speaking about over the past few days.
But just to recap those, there was the
reports that the US government is
looking at taking a 10% stake, an equity
stake in the business and as well you
had the plans for SoftBank to invest $2
billion into Intel as well. So off the
back, I mean, you had a very strong
session overnight as you mentioned, but
also when you look what you've seen over
the course of August, it's gains are
around 30%. So it does mean that at this
point, Intel is trading at a very
expensive valuation, you're looking at
53 times projected profits over the
coming 12 months and that's the highest
now going back to 2002. Uh so it brings
us into the dotcom bubble era, which is
of course is a is a bit of a cause for
concern because Intel as a company, I
mean, its outlook is highly challenged.
were just a few weeks off earnings for
instance the latest release it was still
pretty pretty grim really on the outlook
lip Bhutan the the CEO there has quite a
big challenge ahead in terms of that
multi-year what could be a multi-year
restructuring effort and again what
analysts say as well because fewer than
8% of the analysts that are tracked by
Bloomberg have a buy rating on a stock
the vast vast majority around 80% keep a
neutral rating instead but certainly
that valuation again has been one to
watch you're just looking at some of
those big Asia supplies he listed in
Japan and Korea this morning. Mixed
fortunes so far.
>> We've seen really huge gains for the
broader tax sector on those uh optimism
that optimism over artificial
intelligence. We're seeing perhaps some
changes in Meta's approach to its AI
division.
>> Yeah. Well, Meta, as you know, has has
really been pursuing artificial super
intelligence. So, it's the very
ambitious effort given we're not a
general intelligence just yet, but they
are looking at super intelligence. And
to that end, they've been spending
billions and billions of dollars of
recruiting some of the top talent. It's
now under the leadership of Alexander
Wang. He's someone who recently joined
the the the business in a formal
capacity as the chief AI officer. And
overnight, he sent out a memo to staff
saying that they're going to be
splitting the AI group into four
different key divisions. So, the first
one will be overseeing Meta's large
language models. The second one will be
the existing internal AI research lab
that's been around for about a decade,
but will be focused on longerterm
projects. Uh the third one will be
looking at taking those models, that
research, putting it into consumer
products. And then the fourth as well,
we'll be looking at the expensive
infrastructure that's needed to support
Meta's AI ambition. So no layoffs were
announced. Uh but it is just sort of
making changes here or that's at least
according to sources familiar with the
matter. But it is about sort of trying
to capitalize on the amount of talent
that has been hired into the business.
>> Bel, as we look to these US giants AI
plans, it's also about Chinese names
BYU's AI efforts. That's going to be a
focus when it reports later. What are we
expecting?
>> Yeah, that's right. I mean, it's it's
we're kind of halfway through the the
reporting for the the big eight tech in
China. Uh, BU is going to be one to
watch of course closely later today.
It's it's had quite a challenged outlook
when it comes to AI. As we were saying
earlier, it's it's a company that was an
earlier frontr runner in the AI race in
China. It was one of the first to get a
large language model Erniebbot onto the
market. Uh, but since then it's it's
really had to seed a lot of ground and
it's faced a lot of really stiff
competition. So, a Bloomberg
intelligence team is saying that revenue
is likely to slip. Uh in fact net income
or adjusted net income could have
declined around 30% in the period.
Couple of key concerns here. You've got
the AI ventures. They're saying that
those are going to be losing money for
the next 3 years. Uh the the rising
development costs of those as well are
playing into it. Plus you've got the ad
revenue bu of course it is the largest
search engine or primary search engine
in China. Ad revenue has been a primary
revenue generator for the business. But
as you build out AI, just like we see
with other search engines in the US for
instance, there's always that concern
that you're going to be cannibalizing
your your search business. And then as
well, uh, one last thing to watch in the
earnings today will be the the update on
how the roll out of Apollo go, that's a
robo taxi plan, how that's also fairing
given that that could be one of the
brighter spots for the business.
M
>> Annabelle Dr there with the biggest tech
stories today and take a look at how
we're setting up with those tech names
across Asia. A little bit of a mixed
picture right now as you see Samsung
gaining ground but SK Heinix on the
other hand losing more than 2% at the
moment. Of course we've talked about the
tech selloff in the overnight session
stretch valuations. The NASDAQ 100
trading at 27 times expected profits in
the next 12 months. Now we're seeing
options traders fearing that deeper tech
plunge buying disaster puts. And you can
see Soft Bank really uh unchanged and
not trading as of yet after we heard
about that potential $2 billion
investment into Intel April.
>> Yeah, tech as you alluded to is really
front and center today after it led the
selling on Wall Street overnight. What
is this going to mean for Asia stocks?
Let's bring in our next guest who
remains bullish on Asia equities for the
rest of the year. With us now is Rupal
Argarwal, director and senior research
analyst at Bernstein. Rupal, really good
to have you with us. Just starting off
from the backdrop first of what we're
seeing in the US, is this healthy
rotation or a sign of something more
concerning?
>> Hi, good morning. Um, so I think what
we've seen overnight coming from US,
it's just a sign that um, a lot of the
markets are priced for perfection. Um
and hence uh this is uh a healthy
correction in in our view. uh nothing uh
you know uh in in terms of uh what
surprises us uh there there while we
have remained more bullish for the
broader Asian markets there were
expectations that in the near term
markets are likely to remain volatile
because there is still a lot of uh
geopolitical and tariff uncertainty and
hence um you know our recommendations
for investors have been that uh you know
it's just too soon to not have hedges um
and that uh hence we do think that some
of this recent volatility uh was
expected.
>> What is your sense of the risk of a
reversal and which Asia markets are more
exposed?
>> We think uh across Asian markets there
are uh certain types of stocks which are
at very high risk of a reversal. I would
attribute it to the fact that um across
Asia uh there's been a very strong
valuationdriven cycle and the earnings
um has been uh not coming through across
the board and hence there has been a
strong chasing of uh you know limited
number of stocks where the earnings
momentum has been very strong. uh you
can see that across markets whether it's
uh you know market like Korea which has
been phenomenal this year uh market like
China which has been very resilient even
market like India where it's been
struggling a bit but uh you know stocks
where the earnings momentum has been
very strong um has actually uh reached a
point where across markets it's looking
or trading at record valuation so that
is where we do believe there is a high
risk of reversal
>> how does the Chinese market stuck up
there because there was a lot of
optimism over the tech sector earlier
this year with the frenzy around
deepseek. Where are we now especially
perhaps for those high growth stocks?
Um again we are making a call that uh
you know while the growth stocks in
China have done phenomenally well I
don't think there is an imminent risk of
a reversal but um as we progress through
the year some of these stocks are likely
to start seeing some downward pressure
because what we have seen in China is
this trend and this extreme dispersion
where uh the kind of momentum that we've
seen in growth stocks um is at 20-year
high um and hence we do think that they
are um at a higher risk of a potential
inflection uh sometime later in the
year. Uh so not an imminent one but
something to really watch out for.
>> Could we see an inflection in the
Japanese markets? I mean we have been
around record highs but at the same time
when we got the export numbers today
they look pretty grim especially given
the tariff hit.
>> Absolutely. I think uh Japan uh in the
recent few months have uh have come back
uh quite sharply. Uh but again similar
to our positioning across Asia um you
know the thought process was that it's
just too soon to not have hedges and
hence we are still sticking to a bit of
defensive exposure even in Japan uh
while adding more cyclicality as we go
uh you know through the year. Uh so
there is while the rate hike cycle for
example is back on the table we still
think that uh you know there is a lot of
uh macro uncertainty geopolitical
uncertainty and hence in the near term
uh there is a need to hide into some of
the quality names in Japan
>> in the near term are you putting any
hedges or are you being a little bit
more concerned given that we're headed
to Jackson Hole and what will you be
focused on?
So I think uh Jacksonhole is uh
extremely important this time around. Uh
we need to understand you know whether
we are heading towards an aggressive
rate cut uh environment. That's probably
one big boost uh which is remaining for
the broader markets. Um but I would also
say that uh you know uh the focus needs
to come back on the fundamentals. There
are markets uh in Asia where the you
know the rally has been much more driven
by valuations in some instances purely
currency for example Taiwan um and that
is where you know I'm a bit concerned so
the way that we are approaching the rest
of the year is uh incrementally we keep
on getting more bullish uh we add more
uh you know in we we basically remain uh
you know dip buyers in certain markets
like say China, Japan uh you know India
but uh we need to be more selective in
terms of uh you know adding more
cyclicality too aggressively.
>> Rupal to your point on adding on China
we've also been seeing mainland turnover
really picking up. I mean how important
are you seeing that as a driving force
of sorts?
>> Oh it's been uh one of the biggest
driving force in our view. uh if we look
at the global flow towards China that's
been relatively weak except for the very
sharp inflow that we saw back in
February after the deepseek moment. Um
largely Chinese equities have been
driven by domestic money and we still
think that there's a long way uh or a
long tail to that particular uh you know
support. Um at the same time um you know
it does raise a question in terms of uh
how further we have come through the
rally. Um there are certain early signs
I would say across the market where
there are too many stocks which are
already um you know looking reasonably
expensive. Um and hence something to
really just be uh watching out for while
there is a lot of optimism on continuity
of the domestic flow. Uh we are uh
heading towards a potential you know uh
reversal not as I said you know not an
imminent one but something to just uh
you know be aware of.
Rupal Agaral, really good to have you
with us, senior research analyst at
Bernstein. We have more ahead on the
Asia trade. This is Bloomberg.
President Trump is urging Russia's
Vladimir Putin and Ukraine's Voldemir
Zalinski to show flexibility as the
White House encourages the two leaders
to hold a bilateral summit. The
president um has spoken to both leaders
about this and both leaders have
expressed a willingness to sit down with
each other um and so our national
security team will help both countries
do that. Ultimately, the president has
always said that there are areas of
>> Let's bring in Bloomberg senior editor
Derek Walbank with us. Derek, so do we
have any idea right now what security
guarantees could look like for Ukraine?
>> Well, Sher, this is all very much in
development. So, there's not a lot of
meat on the bones here, but what you're
seeing is a concerted effort from
European partners in the so-called
coalition of the willing to try and form
a security apparatus that could present
a credible deterrent to Russia in favor
of Ukraine in any sort of peace
scenario. Trump was open about the idea
that he was okay with this sort of
multinational
uh force that could that could be there,
an article 5 style trigger. This
wouldn't be NATO, but kind of model
modeled on that article 5 style trigger
there. Again, a lot of ideas circling
around, not anything specific. Uh
although we do have an idea that
American military equipment would
probably be a key part of this purchases
certainly but probably not American
boots on the ground. That would probably
be European uh boots on the ground sort
of trying to do that. Now the European
partners are trying to do this a little
bit because they see that it's not
something that they want Vladimir Putin
to have a veto over. You know, this is
something that Putin, in their view,
probably doesn't want to have happen.
But since Trump is open to it since they
were just at the White House, the idea
is go now, get this set up, make this a
little bit of an inevitability, and it
sort of strengthens Ukraine's position
going forward.
>> How much momentum is there for this to
carry on into a Putin Zalinski meeting,
which is what Trump wants to see? And
not just that, he wants he thinks it's
better that the two meet without him.
Well, that's right, Averil. Uh, you
know, when we were at hearing from Trump
in Alaska, he was talking about a
trilateral as the next stage. And then
after meeting Zalinski, you know, the
next time that we heard from Trump, it
was, oh, we'll we'll do a bilateral
between between Putin and Zalinski and
then it will be a trilateral if
necessary that he would also go to. So,
that's kind of where we are right at the
minute. Now, uh, Zalinski and Putin to
some degree over the last several months
have been sort of playing this kind of
contest of trying to make sure that the
other person is seen as the unreasonable
one, as the obstacle to a peace process.
Trump has said that he thinks both of
these folks are uh are are credible
actors looking for peace, but he's also
said that both will have to make
sacrifices of some kind. for Ukraine.
That is a clear nod to the idea of
territorial concessions. Uh both the
2014 claim on Crimea, which Russia took
over at that point, as well as some
lands that Russia has taken since 2022.
What Russia might concede, it's it's a
little bit harder to say. You know,
Zalinsky has talked about prisoner
swaps. has talked about people who were
taken from Ukraine being repatriated,
other things like that. But any sort of
deal is likely to fall very far short of
the original Ukrainian aims which were
some form of consequences for Putin. All
of the territory that was lost coming
back, reparations of some kind, etc.
Now, Ukraine does, it is important to
note, have some other things that it
very much wants in terms of overall
stability. One of those is a path into
the European Union. And we understand
that Trump called Victor Orbin, the
Hungarian leader, uh who has been one of
the uh the stumbling blocks to that idea
to try and sort of sus out whether any
movement on that was possible. Uh it
does not seem so far like Orbin has has
moved on that point. But certainly if
you're talking about a durable peace
process, something that doesn't get us
back to this point in 3 4 5 years, one
of the questions you're asking yourself
is what sort of structural guarantees
could Ukraine get? Trump is not keen on
Ukraine joining NATO, but the European
Union, maybe that's something that is
seen as a a deterrent because maybe, you
know, Putin wouldn't want to invade an
actual UN member nation. There's a lot
that's going on here in the sidelines in
terms of trying to craft something.
There are a ton of unanswered questions
here, but this is kind of where the
conversation is framing as we look
forward to a meeting that so far is
suggested but very much is not firmly on
the calendar yet.
>> Derek, thank you so much. Bloomberg
senior editor Derek Wbach. Now, as Derek
was just alluding to, European leaders
are really rushing to capitalize,
leverage on the support that they've
gotten for Trump so far in shaping some
of these contours of Ukraine security
guarantees. And against this backdrop,
let's take a look at how Euro stocks 50
futures are fairing at the start of
trade down half a percent looking quite
negative at the moment. The euro against
the green bag is also losing ground. the
other currency or cross that we've been
keeping tabs on the British pound and of
course this is ahead of inflation data
that could cement the idea that we might
not see a BOE that's cutting yet again
Sherry
>> right April and some of the other
stories that we're following at the
moment US commerce secretary Howard
Lutnik saying that written documentation
on the trade deals agreed with Japan and
South Korea are weeks way. He also told
CNBC that Washington is on the same page
as Tokyo and Seoul on the deals. Trump
earlier announced that the US would
charge a 15% tariff on imports from both
countries.
The Trump administration says it will
step up scrutiny of imports of steel,
copper, lithium, and other materials
from China. It's seeking to enforce a US
ban on goods allegedly made with forced
labor in the Shing Jang region. Under a
2021 law, the US assumes anything made,
even partially in Shing Jang, is
produced with forced labor. But
companies may win exemptions if they can
present evidence that proves otherwise.
of his steel and aluminum tariffs to
offguard. We have more ahead on the Asia
trade. This is Bloomberg.
We're watching South Bank right now. Of
course, we continue to see the losses of
more than 8% despite the $47 billion
stock rally that we saw this month
really hitting the wall. Aggressive
investments in artificial intelligence.
We heard of those plans to invest $2
billion in Intel, but we're seeing some
profit taking. The 14-day RSI in
overbought territory, not to mention
that the price is already uh much higher
than most analyst target prices. So,
we're seeing that downside right now,
April and South Bank.
>> Yeah. The other uh big asset class we're
watching, of course, is bonds, not just
in Japan, but in New Zealand. Seeing
some pressure at the moment, and this is
despite the expectations that the RBNZ
is going to cut 25 basis points, uh that
pressure also seems to be coming through
on the Kiwi against the greenback. This
is Bloomberg.
We're seeing broad downside across
markets in Asia with the Cosby losing
more than 1% almost 2% right there with
the lowest levels since early July
already. The Nikkay is also extending
those losses that we saw in the previous
session and all of course to do with
perhaps a little bit more riskoff
sentiment ahead of Jackson Hole. We've
been watching also trade numbers,
Japan's July exports disappointing to
the downside, trade surplus turning into
trade deficit. In fact, we heard from
the Secretary of Commerce Lutney talking
about written documentation on the trade
deals agreed with Japan and South Korea
still being some weeks away. And it's
really President Trump's tariffs that
perhaps is also leading to some
geopolitical realignment. Indian Prime
Minister Narendra Modi hailing closer
ties with China's foreign minister Wangi
wrapped up a two-day visit. The two
sides confirming the Modi will meet with
President Xiinping later this month in
China. Let's get more with Praep Tanja,
senior lecturer in Asian politics at the
University of Melbourne. Really good to
have you with us. Are we looking right
now at New Delhi really repositioning
its foreign policy and what happens to
Washington's Indopacific strategy now?
>> Well, that's a good question. Um, the
relationship between the US and India
lately has been perhaps the worst it has
been in the last 20 years. and um uh
foreign minister Wangi's visit to India
obviously is part of a border
discussions between India and China.
they have a mechanism called the you
know senior representatives meeting and
they represent their individual leaders
but the timing couldn't have been uh
better from India's point of view
because it sends a clear signal that
India is um India has options that India
is um improving relations with its
neighbor China India already has a good
relationship with Russia so you know the
signaling could be or it's indirect
signaling from India to the US that we
do have other options. But having said
that, I think it's important to remember
that US India relationship is very
important. Both countries have invested
heavily over the last 20 years in this
relationship. There's a lot of political
capital that's gone into building up
this relationship. So India is not about
to sacrifice its relationship with the
US. But clearly given President Trump's
language, he called the Indian economy a
dead economy which was obviously very
offensive from India's point of view and
Indian government is trying to signal to
the US that we believe in multipolarity.
We have a policy of strategic autonomy
and we will improve our relations with
China if we have to.
So if we're perhaps seeing this pause in
the warm relationship between the US and
India at least with the Trump
administration now in power, what does
that mean for other groupings and
alternative friends that you talk about?
Because we also heard from Prime
Minister Modi just this week calling
President Putin again a friend.
>> Yeah, I mean as I said, Prime Minister
Modi is not going to do anything that
would jeopardize the relationship with
the United States. President Trump is in
office for another three years and a
bit. But the US India relationship is
far more important than any individual.
So President Prime Minister Modi is not
going to go into name calling or calling
the American economy a dead economy to
retaliate but he is going to try and do
everything possible to improve the
relationship with the US. Remember the
US market is very important for Indian
companies and India doesn't want to do
anything to jeopardize that
relationship.
>> Uh Prairie I wonder though what could
potentially scupper what we're seeing
between India and China. How big is an
issue of Pakistan?
>> Well Pakistan is a very important uh
factor. Uh India
as you know India and Pakistan engaged
in 4 days of u hostilities
uh around the Jammu and Kashmir area and
um also the fact that foreign minister
Wangi he is leaving this morning for
Pakistan the reports are saying that
he's traveling from India to Pakistan
and that's not something that India
likes because India doesn't like to
hyphenate itself with Pakistan it sees
itself as a better and a much more
attractive you know country to work with
than Pakistan and India has in the past
objected to you know India's
interlocutors engaging with Pakistan at
the same time as they engage with India
so this visit to Pakistan directly from
India is certainly not going to go down
very well uh in India
>> with that in mind would you say then
that this symbolism between India and
China the signaling the extent in which
I mean your assessment of how this is
actually going to translate into
regional groupings which is I think the
point that Sher was alluding to such as
Briggs
challenging the US and the US-led global
order
>> well Indian diplomacy has always played
on both sides of the road India you know
India has over the last 20 years
improved relations with the US with the
west more broadly but at the same time
it continues to maintain very good
relationship with Russia it is a member
of bricks it is also a member of the
Shanghai cooperation organization and
and therefore it's part of India's
policy of multipolarity
and and not having you know not becoming
a treaty ally of any one power so India
believes in a strategic autonomy and I
think being able to engage with both the
United States and the West more broadly
and with Russia and China through SEO
through bricks is part of India's
foreign policy. So it does require
fairly careful very deaf handling of
Indian diplomacy but Indian diplomats
are pretty good at doing it because
they've been doing it since you know
independence
and it seems the catalyst for all of
this realignment recently has started
with of course President Trump's tariffs
and the threats of 50% tariffs on Indian
goods. We do have that August 27th
deadline when it comes to reaching an
agreement. Do you think there are some
lowhanging fruits and what do you expect
the outcome to be on a potential trade
deal?
>> Well, before I comment on the tariff and
you know as you said correctly they they
are supposed to come into effect on the
27th of August. The fact is that India
and the Trump administration were
engaged in very serious trade
negotiations. India had made the most
most generous market access offer to the
United States in India's history and
President Trump and the Trump
administration have rejected that offer
or at least not accepted that offer from
India's point of view. That's a very big
negative. But there is still hope that
because President Trump is given to
changing his mind, changing his position
all the time. So it is still you know
hope that India and the US would be able
to reach some sort of understanding
before the 27th although I know it's
very closed now
>> amid all this it's also about how the
tariff threat is being received
domestically in India I mean we saw just
a couple of days ago Modi coming through
with tax you know potentially a new
regime we can see cuts as well what is
your sense of how this is being uh
assessed by the Indian public.
>> Well, this is a good question because
there was a very favorable very positive
mood, public mood towards the relations
with the United States and that mood has
been soured by these you know
announcement of 50% tariffs on India. So
in terms of public opinion, I think the
Indian public is with Prime Minister
Modi and in fact it the the actions
taken by the Trump administration make
it much more difficult for Prime
Minister Modi to make any further
concessions to the United States.
>> Praep really good to chat with you.
Thank you so much for your analysis.
Praep Tanya is senior lecturer in Asian
politics at the University of Melbourne.
Now we are also tracking EVs and Tesla
has priced its new six-seater Model Y in
China in the same range as local rivals
trying to win over middleclass families
in the country's hyperco competitive
market. Bloomberg's transport reporter
Danny Lee joins us now from Hong Kong.
Uh Danny, we're looking at Tesla and how
it's jostling against the local
competition.
What is your sense of managing to fight
back against these local players from
its pricing strategy?
>> Yeah, Tesla is trying to price to
perfection in a really highly
competitive marketplace. A marketplace
of late it has struggled with uh falling
sales, greater competition than ever.
But yes indeed this uh new six-seater
Model Y it released or the pricing it
released rather and that's coming in uh
similar to some of the local rivals such
as your Le Auto L8 and the Ito M8 as
well. So these are all very uh you know
comp you know competitive products and
uh the fact that Tesla has to come to a
level where it needs to stay relevant in
the marketplace and so yeah this is
indeed it shot to try and revive sales
not just in China but more broadly
globally and so uh indeed what you have
seen in like it Shanghai factory which
is its largest in terms of output it has
struggled and that has been a kind of
indicator of its you know broad
performance but this know has helped at
a time where we are looking for other
catalysts and we are still waiting for
uh the Chinese government to approve
driver assistance features that Tesla
wants to roll out into China such as
full self-driving and so this could help
you know really spur on this revival for
for Tesla and to try and you know rein
in some of that com competition that it
has been facing of late.
>> Yeah, I mean it's become such a crowded
market. It's been really interesting to
see the latest developments in the EV
space, especially with the likes of
consumer tech giant like Xiaomi for
example and we're now hearing about some
global expansion plans for this company
as well.
>> Yeah, I mean Xiaomi having had a really
strong run uh through its earnings and
reflected through its emerging EV
business now. Now its next plan is to go
to Europe by 2027. So taking on the
likes of Tesla and BYD uh in a different
marketplace and it feels very confident
even with a small lineup but a very
popular uh set of products it's produced
out of China at a very affordable price.
Uh so yeah this is very much consistent
with Xiaomi going global and making that
$10 billion bet. Uh but what we have
seen though is uh Xiaomi's earnings
you've seen the on the EV side losses
narrow in the second quarter to 300
million yuan you know revenue hit you
know in line with expectations largely
but it does come at a time when its core
business unit of smartphones has been
sluggish in terms of sales. So you know
it's good on one hand that it is seeing
some growth in in somewhere like the EV
business which is really helping
earnings and you know as it tries to
look beyond say like smartphones and
have a bit more of a diversified uh
consumer portfolio. This is a something
that is one to watch as it tries to know
really push the boundaries with more
products not just phones but into EVs as
well.
Danny also want to watch is Xpong while
Xiaomi met Xpong missed the estimate for
the revenue forecasts. I mean what are
you gleaning from these results?
Well, Xpong has had a a strong recovery
after finding difficult periods over
multiple months in terms of sales, but
you know, it's sales of like have been
really strong and I guess the
expectation for analysts was to see that
strong performance in the in the volumes
of sales into something like the uh the
the kind of revenue expectation.
Clearly, that has uh know been shy of
what the the street is looking for. uh
but then again it is in a much better
position with losses being uh cut
significantly. Uh so I think generally
speaking given the more difficult
regulatory backdrop what China is trying
to do to you know keep the competition
in check to ensure that there is less
cutthroat competition I think the likes
of of Xiaopung being in a better
position on earnings and and on sales
puts him in goodstead regardless of uh
whether it the street it's not meeting
its expectations particularly for the
third quarter.
Manny Lee there and in fact we'll hear
more about Xpunk directly from the vice
chairman and president Brian Gu about
their earnings outlook, global expansion
plans, Tesla's new pricing as well.
That's coming up on the China show at
the times on your screen. This is
It's hot, hot, hot here in Japan and
perhaps no relief in sight. Japan's
National Weather Agency says high
temperatures across much of the country
are set to last for another month. The
persistent heat is set to keep power
demand elevated with a lack of rainfall
hitting hydropower generation. The key
rice producing regions of Tohoku
and Hokuriku are getting less than half
their usual rainfall, raising risks to
the nation's staple grain at a time of
growing public resentment over the cost
of living here. April.
>> Yeah, Sher. And the other thing we've
really been tracking is President
Trump's trade deals, right? and their
impact on Asian economies and how these
higher tariffs on exports, especially
the region's exportdriven emerging
markets. Bloomberg NEF and energy
transition and trade specialist Caroline
Chua joins us to break down what these
new agreements mean for the region.
Caroline, what are we seeing in terms of
the impact from these deals and the
implications for clean tech exports from
the region?
Yeah. So, we've really seen the efforts
of the governments here in the APEC
region and their pro proactiveness in
engaging the US for trade negotiations
really pay off. Uh, several key uh APEC
markets have successfully secured lower
reciprocal tariffs than what was
previously announced back in April this
year. So key uh APEC markets are now
facing a tariff range of between 15 to
40%. And that's down from the 17 to 49%
that we heard back uh during liberal
liberation day. And among them are
particularly big winners such as
Cambodia and Vietnam that now faces a
tariff levels of 19 and 20% respectively
down from 49 and 46% um that they were
threatened with back in April. So there
are some wins there. And in terms of the
clean tech export side of things as
well, uh Japan has secured through their
trade deal a 15% tariffs on their
vehicle exports. Uh that includes
electric vehicles going into the US and
that's lower than the standard 25% US uh
tariff imports for vehicles going into
the country. And so this will give
Japanese automakers an edge um around
the world. Uh but the story is less
positive for other sectors such as solar
and batteries. And these sectors remain
under remain under quite heavy scrutiny.
uh solar in particular is quite uh hit
quite heavily and the solar exports
actually dominate exports from Southeast
Asia uh into the US and these exports
are also subjected to other duties such
as the anti-dumping and counterveailing
duties which were introduced to try and
level the playing field for local
manufacturers in the US. Um so this have
raised costs for exports going into the
US and have cut uh cut the flow into the
US quite significantly.
So when it comes to these clean techch
exporters, are we seeing a change in
their strategies given these latest
developments?
Yeah. So, we're seeing them being quite
adaptable and in the past uh AP pack
manufacturers have tried to shift their
production bases around the regions uh
across different Southeast Asian markets
to where allows them to remain
competitive and still access uh the US
as a important export destination. uh
but as increased uh trade restrictions
uh are being laid out uh protectionism
measures uh increase uh they are
actually facing quite a heavily
constrained environment. It's getting
very difficult to find safe havens
around the world. And so in response,
what we have seen them do is continue to
seek out new production bases such as in
the Middle East, in North Africa, but
also seek out demand from outside of the
US in emerging markets where the
adoption of clean energy is accelerating
uh just so they could continue selling
their products uh and reduce their
reliance on the US. There is a added
layer of complexity in terms of strategy
uh in the midst of all the the trade
policy developments and that's the
introduction of the trans shshipment
rule that we saw in the latest
announcements uh for the tariff levels
and the US is looking to impose a 40%
tariff penalty on products that they
deem to have been rerouted in order to
avoid duties. Um and and what that means
uh is that it will affect strategies of
how APEC manufacturers uh choose where
they choose to produce how they choose
to deliver goods into the US. And the
intention of this trans shshipment rule
is to close out tariff circumvention
loopholes. But the rules are still vague
and we are still pending clarification
for what that really means, how they
going to determine if something has been
transipped. And in the short term, it
actually potentially could create
arbitrage opportunities. uh for example
a solar module that is manufactured in
Cambodia and sh and exported to the US
now face an effective tariff level about
671%
but a panel that's made uh in China and
determined to have been shipped through
Cambodia into the US um pending further
clarifications and announcements face a
tariff level about 424%
uh so that's definitely going to affect
how uh manufacturers choose to sell and
and where they choose to produce Right.
Bloomberg NF Apac energy transition and
trade specialist Caroline Chw there. We
have more ahead on the Asia trade. This
All eyes on central banks this week
ahead of Jackson Hall. Not to mention
here in Asia, we do have a couple of
central bank decisions including the
RBNZ widely expected to resume cutting
interest rates to 10-year yield holding
at that 449 level. And of course, we do
have Bank Indonesia as well expected to
stand pat in order to support the rupia.
We've been watching JGBs as well very
closely because we have a 2-year 20-year
debt sale uh having weaker than average
demand. So, we continue to see uh really
the pressure on JGB's long term. Uh it's
really a global story actually when it
comes to longerdated bonds under
pressure globally because of some of
those fiscal concerns. But of course
we're headed towards the speech by chair
Federal Reserve Chair Powell on Friday
as well and what that means for uh that
rate cut potentially coming in
September. Fed Governor Michelle Bowman
saying that she's really staying focused
on her regulatory portfolio as well.
Even of course as speculation grows over
the succession plan for Fed Chair.
Bloomberg spoke exclusively with the
vice chair for supervision ahead of this
week's meetings at Jackson Hall.
>> Well, right now I'm committed to doing
the job that I have and we've really hit
the ground running with our with our
fraud and other payments fraud with this
moving through it quickly. Um obviously,
completed uh in the near future. Um but,
you know, I I'm I'm really focused on
the job that I'm doing and I'm grateful
to the president for appointing me and
and the Senate for confirming me to this
right now. Well, some Republicans on
Capitol Hill have suggested that we
should change this three-headed uh
regulatory system and maybe uh take
regulation away from the Fed. Uh what
are you telling them and what do you
think the odds of something like that
happening are?
system. So we have national banks and we
have state chartered banks and the FDIC
and the Federal Reserve oversee those
state chartered banks together with the
state banking commissions. So I think
it's important that we maintain the the
ability to oversee both the state
chartered banks and the and the OC OC
with the national banks and that we have
a rational framework that is very
between the three regulators. But
>> Fed vice chair for supervision Michelle
Bowman speaking exclusively with our
colleague Michael McKe. That's it from
the Asia trade. Our markets coverage
continues.